Marketplace Fairness Legislation Moves Up in the Senate Agenda

This week, Senate Majority Leader Harry Reid (D-Nev.) will schedule a Senate floor vote on legislation that will allow states to collect sales taxes on online purchases. Sen. Reid’s move would circumvent normal order by bypassing the Senate Finance Committee’s consideration of the bill, thus propelling the bill forward in the chamber.

The Marketplace Fairness Act (S. 743), championed by U.S. Sens. Dick Durbin (D-Ill.), Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.), would close an unfair loophole that benefits online retailers over local brick-and-mortar stores by requiring that online retailers collect proper state sales taxes on goods and services that are sold over the Internet. The bill would exempt small businesses that earn less than $1 million annually from out-of-state sales.

Currently, states can only collect sales taxes from retailers with physical presences in their state, which means that customers can order items online from another state for less money, thus, taking away sales from local businesses. Though online shoppers are—by law—required to declare their Internet purchases on their tax forms, few actually do.

AVMA has been supportive of this legislation because of the impacts that online retailers have on its small business veterinarians. AVMA, along with more than 200 businesses and trade associations from across the country comprise the Marketplace Fairness Coalition, which is serving as the focal point for the business community in an on-going effort to pass federal legislation that will even the playing field for all sellers. The coalition has been actively working to pass the legislation for two years.

The Marketplace Fairness Act has also received broad support from federal policymakers. Last month, 75 senators voted for a nonbinding budget resolution amendment (S. 335) that signalled their support for the legislation. Although the vote had no legal impact, it showed an important demonstration of support for the proposal.

A companion U.S. House bill (H.R. 684) is also being championed by U.S. Reps. Steve Womack (R-Ark.), Jackie Speier (D-Calif.), Peter Welch (D-Vt.) and John Conyers (D-Mich.). However, the prospects of this bill moving forward in the House are less certain. Though the bill will not raise federal taxes, its chances of gaining the necessary votes to pass in the House are less certain due to the fact that there is a core group of House Republicans who view all taxes unfavorably and may not support it.